Economic Decision Making for interventions to Prevent or Ameliorate Social Isolation and or
Loneliness
Economic evaluation has been developed to help decision-makers achieve efficiency or make
resource decisions. If resources were not in short supply, an unlimited range of services could be
provided for any member of the community demanding it, then there would not be a need for
economic evaluation. Unfortunately, scarcity cannot be avoided, with the implication being some
service will not be provided.
A plethora of information exists relating to work that purports to estimating the cost of social
isolation or loneliness or cost of interventions to prevent or ameliorate social isolation or loneliness.
Figures are given that imply that an intervention is cost-effective is often quoted or impressive ratios
of social return of investment. However without recourse to the decision problem to hand and used
in isolation, can be misleading. So included here are some considerations for decision makers when
assessing the reliability, validity and relevance of such evidence.
Defining the Question
Some types of evidence may lend themselves more appropriately to different sorts of economic
question. Questions might be:
What is the cost of social isolation?
Is there a rationale for providing interventions to tackle social isolation free at the point of
use?
Are you deciding whether to use a particular intervention over another?
Is the proposed intervention capturing a broad or narrow range of outcomes?
Is cost savings implicit in your decision or are you more concerned about net improvements
in social welfare (wellbeing)?
Having defined a question you are in a better position to decide what sort of evidence from what
sort of study or evaluation relate to your question.
Types of Evaluation
Cost of Illness
Cost Analysis
Cost Benefit Analysis
Measures the cost of health and social
care costs as a result of being lonely or
socially isolated. Difficult to attribute
directly to and causality to social
isolation.
Measures the cost of the intervention –
useful for cost minimisation of
interventions. Useful where outcomes
are known to be equivalent
Welfarist approach – measures
outcomes in money and so can be
compared to none health interventions
Does not account for the
intrinsic welfare loss to the
individual due to social
isolation or loneliness
Cost without recourse to the
benefits or outcomes of an
intervention
Difficulty in measuring
outcomes that do not have a
market value e.g. health as you
can't buy health
Cost Effectiveness
Analysis
Cost Utility Analysis
(a special case of
Cost Effectiveness
analysis)
Behavioral
economics
Social return of
Investment
1
Extra- welfarist – looks at decisions to
maximise health as an outcome measures outcomes in natural units –
would be good for measuring the impact
of social isolation/loneliness using a
standard tool for comparisons between
two interventions.
Extra welfarist – looks at health as the
outcome and measures include the
Quality Adjusted Life Year (QALY) – can
compare interventions with different
health outcomes and on different health
domains including mobility, self care,
activities, pain and mental health incorporates an element of societal
preference.
Diminishing marginal utility of
health, assumes people value
health equally
Libertarian paternalistic approaches –
considers decision making related to
individual health behaviors (nudge
theory) and favours invitations to
change behaviours
Value beyond financial return. Takes two
forms evaluative and forecast. Includes
broader social and environmental
outcomes. Captures both positive and
negative impacts. Can be applied across
different sectors so useful where
benefits and costs accrue to different
stakeholders. Pragmatic non-academic
approach based on SROI Network
principles. Have been used in both
evaluation and forecasting.
Probably more useful in
understanding the health
behaviors mechanisms and
motivations involved in social
isolation and loneliness
Relatively new approach with
very few studies – 28 public
health SROI studies in UK
2005- 141. Like CBA there
remains the problem of
placing a direct financial value
on soft beneficiary outcomes
but some good proxies have
been used but does need
examination for validity. Poor
comparability of SROI ratios
across different interventions.
Requires input from all
stakeholders. Cannot always
assess the counterfactual –
what the costs are without the
intervention. There can be
displacement effects not taken
into account in the analysis i.e.
intervention in place may
displace family or carer roles.
Banke-Thomas et al. BMC Public Health (2015)15:582
Useful when reported as an
Incremental Cost Effectiveness
Ratio but highly dependent on
a relevant comparator
however more usually quoted
as compared to NICE threshold
which can bear little
resemblance to affordability.
In built bias against older
people when using the QALY.
No consideration of equity.